Abe gov’t yet again begins discussing relaxation of dismissal rules

December 24, 2015

The Labor Ministry has recently set up a panel to discuss relaxation of dismissal rules. What the Abe government aims to accomplish is to introduce a system allowing unfair dismissals if accompanied with a certain amount of compensation. A similar move was made twice in the past but blocked by fierce opposition from the general public and labor unions.

The introduction of the system has long been called for by the business sector. However, unlike France and Germany, which regulate corporate job cuts by law, Japan has very few legal barriers to dismissals.

Japan’s Labor Contract Act, for example, states that if a dismissal “lacks objectively reasonable grounds and is not considered to be appropriate in general social terms”, the dismissal is invalid. The law indicates no clear standards of judgement in regard to determining what “objectively reasonable grounds” are.

Under such lax rules on dismissals, to introduce a system for monetarily settling disputes over wrongful dismissals is tantamount to giving employers a free hand in discharging their employees.

At a time when many companies are slashing their workforce outrageously by such means as massive dismissals and “lock-out” dismissals, the need now is to create legislation which nullifies a dismissal if it fails to meet the so-called “four requirements for dismissing workers” established by judicial precedents of the Supreme Court: necessity of dismissal, efforts to avoid dismissal, rationality in choosing who is to be dismissed, and negotiations with unions.

Furthermore, the legislation should include provisions providing job security to workers fighting legal battles over their unfair dismissals, enabling laid-off workers to return to their original workplaces based on a court ruling annulling their dismissal, prohibiting companies from forcing workers to accept early retirement; and requiring prior consultation with all those concerned, such as local governments or a labor union when a company closes its factory or carries out massive layoffs.